Published: 2016-07-19 07:00:00 CEST
LHV Group
Quarterly report

LHV Group's second quarter and 6 months unaudited financial results

LHV Group earned EUR 4.9 million of profits in Q2

AS LHV Group's consolidated profit for Q2 of 2016 amounted to EUR 4.9 million, with the bank earning EUR 3.5 million, asset management EUR 1.6 million and the Lithuanian business unit EUR 0.3 million. In addition to core business, profit was fueled by the extraordinary revenue generated by the Bank in the amount of EUR 0.9 million.

The Q2 profit constitutes a EUR 1.4 million increase from Q1, and a EUR 1.9 million increase from Q2 2015. LHV Group's return on equity was 22% in Q2.

During the second quarter the group's consolidated loan portfolio grew by EUR 37 million (+9%; + EUR 22 million in Q1) reaching EUR 465 million and consolidated deposits grew by EUR 27 million (+ 4%; + EUR 28 million in Q1) to EUR 682 million. The volume of funds managed by LHV grew by EUR 294 million (+49%; + EUR 27 million in Q1) in the quarter reaching 891 million, this includes the transaction which was completed during the second quarter and under which LHV Asset Management acquired 100% of the shares of AS Danske Capital.

AS LHV Group posted a consolidated profit of EUR 8.4 million for the first half year of 2016. The bank earned a profit of EUR 6.4 million, asset management EUR 2.2 million and the Lithuanian business unit EUR 0.6 million. The half year profit constitutes an EUR 0.2 million increase from last year (Q1 2015 included extraordinary revenue from disposal of business operations in Finland).

Erkki Raasuke, CEO of AS LHV Group said that the first half year was successful for LHV:

„One milestone of the past quarter was our IPO when on May 23, the shares of AS LHV Group were admitted for trading on the NASDAQ Tallinn Stock Exchange. Public trading is not the finale - it is the overture to further growth and development. In order to support LHV's growth, we engaged a total of EUR 13.9 million from our investors, issuing two million new shares. By the end of the first day of trading LHV's market value stood at EUR 180 million.

The Bank's strong first half-year relied on interest income from loan products and stable credit quality. New customer flows have remained strong, with the Bank gaining 2500-3000 new retail customers with each passing month. The number of the Bank’s customers has grown over 96,000. It is worth mentioning that we can clearly sense the effect of current interest rates environment and notice how the liquidity buffer held by the Bank is becoming increasingly costlier.

The Bank earned EUR 0.9 million in extraordinary revenue from the transaction, under which Visa Inc (USA) made a takeover bid for the acquisition of Visa Europe. Similarly to a range of other European banks, LHV Bank held a small quantity of Visa Europe's shares.

Asset Management posted a profit that exceeds the result for the previous quarter by EUR 1.0 million. Since May the Asset Management group incorporates the business operations of Danske Capital. This is also the principal reason behind the significant growth in profit and business volumes. The acquisition of Danske Capital, the merger of the companies and the future merger of the funds has proceeded as planned, somewhat faster than initially expected.

The 2nd-pillar funds managed by Asset Management have shown good yields from the beginning of the year. The investment tactics focus on a high-risk environment, aimed at protecting the pension customers' assets against a sudden market decline. Asset Management is planning to start offering a new investment option to 2nd-pillar pension customers before the end of 2016 – the so-called index fund without active management.

Mokilizingas posted a profit of EUR 0.3 million in Q2, remaining on par with last quarter's result. The amendments of the consumer financing regulations, which entered into force at the beginning of the year, have established restrictions with regard to the volume of new sales on the entire Lithuanian market and this means that our Lithuanian business unit has fallen behind our volume estimates. On the other hand the unit has not fallen behind our profit estimates, i.e. we have achieved the desired result through lower business volumes and cost of capital.“

 

Income statement, EURt  Q2-2016 Q1-2016 6 months 2016 6 months 2015
   Net interest income 7 230 6 788 14 018 10 661
   Net fee and commission income 4 311 3 654 7 964 6 941
   Net gains from financial assets 1 146 199 1 345 3 099
   Other income 127 -15 113 35
Total revenue 12 814 10 626 23 439 20 736
   Staff costs -3 504 -3 225 -6 729 -5 310
   Office rent and expenses -375 -383 -758 -645
   IT expenses -423 -443 -866 -634
   Marketing expenses -754 -1 088 -1 842 -1 582
   Other operating expenses  -2 046 -1 688 -3 735 -2 945
Total operating expenses -7 103 -6 828 -13 930 -11 115
EBIT 5 711 3 798 9 510 9 621
Earnings before impairment losses 5 711 3 798 9 510 9 621
   Impairment losses on loans and advances  -742 -255 -997 -760
   Income tax -68 -77 -146 -736
   Loss from associates accounted for using the equity method 0 1 0 0
Net profit for the reporting period from continued operations 4 900 3 466 8 367 8 124
Profit/-loss from discontinued operations 0 0 0 0
Net profit 4 900 3 466 8 367 8 124
   Profit attributable to non-controlling interest 346 447 793 425

 

Balance sheet, EURt  June 2016 March 2016 June 2015
   Cash and cash equivalents 236 395 249 012 127 076
   Financial assets 103 936 98 698 141 267
   Loans granted 474 452 436 673 362 011
   Loan impairments -5 152 -4 842 -4 438
   Receivables from customers 1 988 1 628 1 677
   Other assets 11 563 3 969 4 703
Total assets 823 181 785 139 632 296
      Demand deposits 482 075 442 243 305 488
      Term deposits 189 928 202 664 204 697
      Loans received 914 15 228 22 002
   Loans received and deposits from customers 672 918 660 135 532 187
   Other liabilities 23 521 16 608 17 133
   Subordinated loans 30 900 30 900 16 650
Total liabilities 727 339 707 643 565 969
Equity 95 842 77 496 66 327
   Minority interest 4 034 3 688 2 585
Total liabilities and equity 823 181 785 139 632 296

 

Reports of AS LHV Group are available at https://investor.lhv.ee/en/reports/.

LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group's key subsidiaries are AS LHV Pank and AS LHV Varahaldus. LHV employs over 250 people and over 95,000 customers use LHV’s banking services. Pension funds managed by LHV have over 170,000 customers.

         Priit Rum
         Communication Manager
         Phone: +372 502 0786
         Email: priit.rum@lhv.ee


LHV Group interim report II Q 2016.pdf
LHV Group Q2 2016 Investor presentation.pdf